“Since my post yesterday about the $20 iPod touch software update several readers have contacted me to explain how Apple had to charge for this update because of generally accepted accounting principles (GAAP). This issue, so I’m told, is much the same as the way Apple had to charge $1.99 the 802.11n enabler for the Intel-based MacBooks and MacBook Pros. Personally, I don’t buy this,” Adrian Kingsley-Hughes writes for ZDNet.
“According to experts it is important to note that there’s nothing in the GAAP requirements that forces Apple to charge its customers for a software upgrade. The only requirement imposed by GAAP is that Apple must account for the separate value that the software brings,” Kingsley-Hughes writes.
Here are the new apps that have been added to the iPod touch:
• Mail
• Stocks
• Maps
• Weather
• Notes
Kingsley-Hughes writes, “To try to justify that any of this offers a $20 value is hard, especially when you consider the overall value that MacBooks and MacBook Pro customers got from the 802.11n switch on. Over the life of a MacBook that has to represent more than $1.99 worth of value if I’m paying $20 for a few apps, does it not?”
Kingsley-Hughes writes, “And finally, can someone please tell me what the difference is between the iPod touch upgrade which costs money and the Apple TV upgrade with is free and transforms an existing Apple TV device into what PC World is calling a substantially different product?”
More in the full article here.
One could say that those who purchased iPod touch knew what the device did and thought the price was right for what they were getting. If iPod touch users want to add more functionality for $19.99, then can. If they don’t, they don’t.
However, with Apple TV getting a massive upgrade for free and iPhone also getting significantly upgraded for no charge, it’s almost impossible to explain to consumers why Apple’s charging for one, but not the others. (We say “almost impossible to explain” because iPhone and Apple TV are amortized over 24-months, iPod touch is not; therein lies the rub) The better question: Is the update worth $19.99?
For consistency’s sake at the very least, Apple should either charge for all upgrades of this type or for none or do a better job of explaining upfront that, unlike iPods and other products, iPhone and Apple TV are special cases that are subject to free upgrades over a certain period.
[UPDATE: 11:58am EST: Fixed incorrect link code that was affecting display of the full MDN Take.]
“But so is free beer.”
Unless it’s Schaefer Beer or Pabst.
$20 for the upgrades beats having to buy a new touch. I bought an Airport Extreme 3 weeks ago. I don’t suppose there’s a software upgrade that will install the hard drive coming any time soon.
What a bunch of whiners. If you can’t afford 20 bucks then you should not have bought an iPod Touch. Go get yourself one of those cutting edge Zune from MS. By cutting edge, I mean, the best they can do is a new paint job!
The difference is in how Apple records the revenue for each item (I’m an accounting dork). For the iPhone and Apple TV, they defer the revenue over a period of time, based upon the intent/ability to expand and enhance the product….for iPod Touch, they recognize immediately – if they start offering free upgrades they would need to start deferring the revenue for those as well…this is an accounting policy election, and in order to avoid changing that they have to charge for upgrades.
I have no major complaint about the cost. An iPod touch did what it was advertised to do and the upgrade adds functionality. But that is OK for those who can upgrade. This is only available via the iTunes store and a lot of people round the world cannot access this for purchases (podcasts are fine), so will be unable to make that upgrade legally.
Can’t believe this guy is bitching about $20. He probably spends more than that on coffee in a week. Just getting email functionality on your iPod Touch alone is worth $20.
5 new applications for $20.
Think about it.
-The iPhone/iPod Touch SDK will be released next month.
-Developers will be creating new applications for these devices.
-Where are they going to sell these applications? iTunes
-What is the price going to be for these applications? $3.99
This is just readying customers for what is in store starting next month. If you want to put apps on your iPod, you will be paying $4 each for them.
The five that were released yesterday are to ensure that customers at least have a mail client, notes, etc. before the developer community has a chance to make new, different and/or perhaps better versions. If Apple already has their versions on your iPod, a 3rd party will have to really show something exceptional to get you to buy it.
Am I the only one that thought Steve looked a little uncomfortable when he said the price, like it was something they’d had to put in but he wasn’t happy about it?
Here’s my take – the real reason they’re charging for the upgrade is because it violates some terms of the agreement with AT&T;for the iPhone. That’s why the iPod Touch didn’t get those features in the first place. AT&T;put their foot down and told Apple that if they’re going to bring out an almost iPhone clone iPod that AT&T;get no sniff of the profits from that it would have to be a “downgrade” from the iPhone to encourage consumers to get the iPhone instead. Obviously they didn’t consider the lack of the cellphone a big enough draw card to stop people forgetting about the iPhone and getting an iPod Touch instead.
AT&T;saw their profits from the iPhone being pilfered by Apple via the iPod Touch and made it clear they weren’t going to stand for it.
But obviously Apple feels strongly enough about it to do it – so maybe the $20 goes straight into AT&T;coffers to compensate them for their loss?
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See my technology blog at http://tumbleseed.torrfamily.org/
In the case of GAAP, Apple “recognizes” revenue on AppleTV and the iPhone differently than the iPod Touch. Apple does it over 2 years on the iPhone and AppleTV, but not on iPods. This allows them to offer enhancements to those two products that significantly increase it’s value after the initial sale without running afoul of SEC restrictions.
I own an iPhone, and of course I’m happy about the software upgrade, and I like the fact that it is free. If it were $20, I’d still pay for it.
Personally, I’d be thankful to Apple that I didn’t have to buy a whole new device to get the extra functionality.
I agree with those who had said: BUNCH OF WHINERS!
I just wish they’d put better details about the Mail app on the website. I just find the basic one paragraph blurb and the few pics. I’d like a better rundown of the features, or maybe that’s all there is to it.
I’ll probably upgrade this weekend. I’ve wanted Mail on the touch, and the weather/stocks apps are useful as well.
better question is why is the screen resolution on the Touch inferior to the screen resolution on the phone?
Arrogant Steve’s answer: if you want the good screen resolution, buy the phone.
That, my friends, is an outrage. —Not the Question
Outrage? Is it an outrage that Mazda’s four-door sedan doesn’t come with the same engine as the Z? Grow up!
Can’t believe these people are carrying on about $20. As Apple fanboys, We’d gladly pay $100 for the upgrade or whatever Steve asks for….
Apple products are delicious, sexy, gorgeous, and elegant: that’s a lot more important than functional. The back of our stuff LOOKS better than the front of the other guys, Hahahahahahahaha (everyone laugh at Steve’s joke!!!!!)
Steve ought to raise the the already too high prices of ALL Apple products 20% or more…. We don’t need cheap people… We can’t sell junk (and ANY product without an Apple on it is JUNK)….
I sure we see a New Mini Tower next year!!!! I’d price it out at about $6000 to keep the cheap people away!!
Yesssss!
@ Tom
“I’d price it out at about $6000 to keep the cheap people away!”
If only there were some way to keep you out of our chat rooms, too.
1. The Touch is phenomenal with or without the upgrade.
2. I am buying the upgrade because I want it.
3. I just purchased a 24″ iMac and and a MacBook Pro. I had to pay for them too.
4. I don’t know why Apple charges for somethings and not for others. I give some of my massage clients deals and some not. It’s commerce.
Has this place ever been so whiny? Shut-up already! You sound like a bunch of old women complaining about the price of bananas at the supermarket.
Cheap.
Oh come on. I’m paying an extra $75 a month for the iPhone. That’s why they’re not “charging” me an extra $20.
You iPod people get a great offer — to upgrade your software with some great and very useful apps and all you do is complain.
Maybe what they say about Mac users is true. Ya’ll’er starting to feel entitled.
shogun is the winner this round!
either buy the iPhone and pay per month or buy the touch and pay for major upgrades if you want them.
everyone else shutup, or learn about SOX.
The Early-Whiners are at it again…..
Just my $0.02
P.S. Now we know why SJ did not introduce the G3 iPhone…163 days to go….
Ok, I’ll go with the idea that the $20 pricetag was caused by a GAAP requirement to account for the value of the upgrade for accounting purposes. This in turn is put in place to account for the value in regards to the shareholders from what I understand.
Now, if this is really the case, why hasn’t the pricetag of the Touch being sold as of today also increased by $20?
Seems to me that on one hand Apple is stating that they need to account for the additional value that the upgrade provides, but on the other hand, doesn’t need to account for that increased value on the Touch’s they are selling as of today.
If this is not the case, then are we to believe that they are ‘eating’ the additional cost of adding the apps to the new Touch, and accounting it as such? So the question is, if they are willing to eat that cost on the new units, why are they not willing to eat some of the cost on the upgrade?
I’m not saying the upgrade should be free, but I agree that it is overpriced. And claiming that they had to do this because of a GAAP requirement just sounds like a cop out.
One upgrade (Apple TV) provides for possible new income streams, while the other (iPod Touch) does not. That probably played into the decision to provide one upgrade for free and charge for the other.
Just imagine the bitch and moaning had Apple upgraded the iPhone to 16 GB and kept the price the same.
Microsoft gave away the Zune 2.0 software to buyers of the Zune 1.0 device FOR FREE! Apple using GAAP as an excuse is very very weak. All charging for the update does is make life easier on their accountants. They don’t HAVE to charge.
jesus – what’s with all the bitching? the iTouch was sold as a media player. the maps/mail stuff is extra!
put it this way: if you download street fighter II for your verizon phone, it’ll cost you $8. what’s $20 for a couple of killer apps that turn your media player into a PDA?